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Jobs Picture at Standstill

By Matthew Yglesias on March 5, 2010 at 10:44 am

"Jobs Picture at Standstill"

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This is sort of good news:

The Labor Department said that the economy shed 36,000 jobs last month and that the unemployment rate remained steady at 9.7 percent.

While the losses were less than Bloomberg’s consensus estimate of a 68,000 decline, the report did not offer a clear snapshot of the economy’s underlying health. With businesses still skittish about hiring, and the end of stimulus programs in sight, economists are concerned that the labor market’s slow growth may hamper a recovery.

This of course raises the question of why the end of stimulus programs is in sight. It seems to me that a good time to end stimulus would be when either (a) Treasury interest rates are becoming abnormally high, (b) the core price level has gone above the long-term trend, or else (c) the unemployment rate is down to seven and clearly falling. Given that (c) isn’t the case, the human welfare argument for additional fiscal and monetary expansion is clear and given that (a) and (b) aren’t the case, it’s not clear what the negative argument is. Unfortunately, a combination of politics, ignorance, and central bank indifference is guiding us toward a different outcome.

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